Final KORUS FTA battle centers on investor-state dispute provision

Posted on : 2011-11-01 13:46 KST Modified on : 2019-10-19 20:29 KST
DP says ISD could harm socially vulnerable groups as GNP opposes measures that will require agreement from U.S. Congress
 chairman of the National Assembly’s Foreign Affairs
chairman of the National Assembly’s Foreign Affairs


By Lee Tae-hee, Staff Writer 


The question of whether to accept an investor-state dispute (ISD) settlement provision now remains as the only point of contention in the passing of the South Korea-U.S. Free Trade Agreement (KORUS FTA). At a marathon general assembly of its lawmakers that ran from 10 a.m. until 5 p.m. on Monday, the Democratic Party decided that it could pass the FTA ratification bill in parliament after a debate, as long as the ISD settlement provision is left out of this ratification bill. The ruling Grand National Party (GNP), however, is opposing this suggestion on the grounds that the agreement of the U.S. Congress and the South Korean National Assembly are needed if the KORUS FTA is to be ratified without this provision.

Opposition: ‘Take out ISD provision’

“[DP] floor leader Kim Jin-pyo has conveyed our intention, which was reached at a general meeting of lawmakers, to Grand National Party Chairman Hong Joon-pyo,” reported one DP official. “Most DP lawmakers believe we absolutely must not accept the ISD settlement system.”

Adamant DP Lawmaker Chung Dong-young said, “The U.S. previously excluded a ISD settlement system when it concluded its FTA with Australia.”

The ISD system is one that would allow U.S. investors who judged that they had incurred damages in a Korean court to sue the Korean government before an international arbitration body. The same would also be possible for a Korean investor via the U.S. government. The DP and the Democratic Labor Party (DLP) are worried that acknowledging this system could neutralize laws for the protection of the socially vulnerable, such as small and medium sized enterprises. If a U.S. distribution company that was operating in South Korea took issue with such laws and sued the South Korean government, the latter could be forced to amend the laws if it lost the case.

The reason the DP is still digging in its heels over the ISD settlement system appears to be that it intends to leave evidence that it opposed the points of greater concern in the KORUS FTA to the very end, while rejecting the agreement in its entirety was impossible.

“We will only know the result of the KORUS FTA in the distant future, but what is clear now is that the result of agreeing to ratify it is something that will go down in history,” said one DP lawmaker.

The DP has made clear that if the government and ruling party do not accept its demand, it will not agree to ratify the treaty.

“I believe the Cheong Wa Dae and the ruling party’s attempt to railroad the KORUS FTA ratification bill is a hardline policy to minimize the shock of their loss in the Seoul mayoral by-election,” said one veteran DP lawmaker. “In this situation, we have no choice but to put up strong resistance.”

The lawmaker’s statement has been interpreted to mean that the DP is prepared to physically block any efforts on the part of the GNP to railroad the ratification bill.

Sufficient protection for farmers, fishermen and SMEs?

On Monday, GNP Chairman Hong Joon-pyo and DP floor leader Kim Jin-pyo also agreed on measures to protect farmers, small and medium sized enterprises (SMEs) and small traders when the KORUS FTA comes into effect. The measures included most of the demands that had adhered to by the DP, farmers and fishermen, such as newly establishing a system of direct payment for dry-field and marine products, maintaining tax exemption on farming and fishing for 10 years, creating a 2.5 trillion won fund to develop the livestock industry, and raising environmentally friendly direct payments by 50%. They also agreed to revise the special support law for farmers and fishermen that resulted from the FTA, increasing damage compensation sums to 50 million won for corporations and 35 million for individuals.

Most farmers groups, however, argued that these were normal farming and fishery policies with no direct link to the FTA.

One national alliance of farmers’ associations issued a critical statement saying, “There is no plan as to how to raise the budget for any of these measures except the livestock development fund. Ultimately, this probably means it will be raised by taking money away from the existing farming and fisheries budget.”

Measures to protect SMEs and small traders included passing a special law to prevent large conglomerates from entering the areas of business of SMEs, and amending the law on developing the distribution industry to limit the operating hours of large enterprises and designate mandatory days for them to shut.

A national alliance formed to stop the KORUS FTA, however, held a press conference and said, “The government has already responded to the SME appropriate business system tabled by the DP by saying that it contravenes the KORUS FTA. Limiting the working hours and opening days of large distribution companies also violates Chapter 12 of the agreement.”


Please direct questions or comments to []



Most viewed articles